Amid low share prices, Ballmer received a chilly reception from some shareholders at their annual meeting

At Microsoft Corp.'s (MSFT) annual shareholder Wednesday, the company's at-times boisterous Chief Executive Steven "Steve" Ballmer brought in Microsoft's "big guns" -- former Microsoft CEO, co-founder, and tech icon Bill Gates and Chief Financial Officer Peter Klein. But at the meeting of 450 shareholders, Mr. Ballmer did not need to enlist the help of his fellow Microsoft elite, who remained silent even as the meeting turned chilly, according toReuters reporters in attendance.

Amid tough questions from the audience, Mr. Ballmer was candid in his assessment that Microsoft was a late-comer to the tablet game, but he told the audience in a fiery defense that he saw "nothing but a sea of upside" for Windows 8 tablets. He comments, "We're innovating on the seam between software and hardware. Maybe we should have done that earlier. [But] I feel pretty good about our [current] level of innovation."

Indeed, Microsoft has some defenders in odd places. Stephen "Steve" Wozniak, better known as the "Woz", was once a ferocious critic of Microsoft and evangelist for Apple, Inc. (AAPL), the company he co-founded. But today he said in a recent TechCrunch interview that he fears for Apple because Microsoft has become more innovative.

While Mr. Ballmer pointed optimistically to Windows Phone sales quadrupling on a year-to-year basis, the platform is still estimated to only own 2 to 4 percent of the global market, well behind Apple and market leader Google Inc. (GOOG). While Microsoft dreams of "pulling a Google" and rising to the top of the stack, it currently is resigned to vying with embattled Research in Motion, Ltd. (TSE:RIM) for the third-place spot.

But when it came to shareholder criticism, the harshest questions came not about Microsoft's products, but rather why its share price was so low. Indeed, Microsoft shares trade at an order of magnitude lower than their Google and Apple counterparts. (To be fair Microsoft has significantly approximately 9 times as many shares as Apple, and 25 times as many as Google). Apple recently passed Microsoft in market capitalization and today has a total stock value that is more than twice that of Microsoft's.

Funny indeed, but the shareholders might have been less than amused. Mr. Ballmer did placate the critics slightly by pointing to Microsoft's $10B USD profit sharing effort which includes share buybacks and quarterly dividends.

Currently, Microsoft shares are trading at around their levels from a decade ago, having risen roughly 18 percent in 2012. In other words, despite the criticism, shareholders should be pleased to an extent that Microsoft outperformed the Standard & Poor's 500 average of an anemic 3 percent in gains.

One of the confusions caused by the attempt to understand the smart phone/mobile device market by using legacy concepts left over from the old PC market is the confusion of market share (devices shipped) with strength of platform. In the PC days the two were synonymous, they no longer are. In the mobile device markets it is possible to ship more units and still have a significantly worse platform, to sell more units but have a weaker platform.

Consider: in the following areas iOS (which sells less units) is a better platform than Android (which sells more).

Given the spectacular difference in the revenues generated for third parties by each Android user compared to each iOS user, Android has to outsell iOS several times over just to come close to creating an ecosystem of similar value. And of course the base iOS hardware business is an order of magnitude more profitable than the insipid Android OEM profits.

It seems that in general and for reasons which are not fully understood but which are very well evidenced the average Android user actually uses Android far less as a platform to do things (other than making calls and texting) compared to iOS. Android is a poorly used platform, iOS is a very well used platform.

Horace Dediu at Asymco had this to say:

quote: We’ve become accustomed to thinking that platforms that look similar are used in a similar fashion. But this is clearly not the case. The shopping data is only one proxy but there are others: developers and publishers have been reporting distinct differences in consumption on iOS vs. Android and, although anecdotal, the examples continue to pile up.

And engagement is not a frivolous platform attribute. It is highly causal to success because it correlates with all cash flows associated with ecosystem value creation. Especially when a platform like Android depends more on engagement than “monetizing hardware.”

I’m not satisfied with the explanation that Android users are demographically different because the Android user pool is now so vast and because the most popular devices are not exactly cheap. There is something else at play. It might be explained by design considerations or by user experience flaws or integration but something is different.

It looks to me that the evidence is very clear that Android is winning the numbers game but losing the platform game, and if greater unit sales leads to poorer platform performance and poorer OEM/Developer/Content provider revenues what exactly are those extra unit sales good for?

That's a very narrow view of it, and it completely ignores all the things that the iPhone lacks listed above ... but then again , look who posted it. ;).

I do agree it's not about volume of sales, it's about what you get as a consumer,and in that battle Android blows iPhone away by a huge margin. That is why the sales are so much higher.

Of course the downside of the open platform with the various hardware is that app support is more difficult, as well as ROM/OS updates. but that's just 1 small part of it, there are so many things missing from the iPhone that it's better app support just doesn't make up for it. It's not all that much better.

Even after the JB improvements, Android still has a LONG way to go to catch up with iOS. I'd argue that WP8 is much closer to getting to that benchmark based on the fact that support isn't entirely in the hands of carriers, and the dev tools/marketplace are better and protecting developer profits (thus leading to devs putting more resources into it). All it is missing (and this is important) is users.

All that said, hardware makers are still putting inferior hardware and displays into their Android hardware. Larger screens and keyboards are all they have to offer, and it is personal preference as to if that is worth the trade for inferior OS support, usability, and developer support.

Removable storage is going away except in 5"+ devices, it is inevitable given the continued push to smaller and smaller ones. The Nexus 4 already ships without it, and there is more to come.

quote: Even after the JB improvements, Android still has a LONG way to go to catch up with iOS.

Subjective. It really depends on which aspects of the phone are important to the individual in question.

quote: I'd argue that WP8 is much closer to getting to that benchmark based on the fact that support isn't entirely in the hands of carriers

Ah, the Achilles heal of android. It is hard to call a phone open when your carrier can saddle it with software that you don't won't, remove features that you do want, and otherwise limit how you use your phone. Yes, you can root an android phone, but that makes them exactly no different than any other phone. Apple doesn't pretend to be open. Microsoft, while also closed, gives you the ability to uninstall anything the carrier adds from the phone. They don't allow Carrier IQ and similarly take issue with Verizon's remote management software that has been reported as an avenue to mine data from its customers. Google lets them do what they want and additionally lock it down so that you can't change it. They only Android phones that I would truly consider "Open" are the Google Nexus phones as they are the only ones without Carrier IQ, a plethora of locked down modifications, and the need to root your phone to get full control over it.

quote: All that said, hardware makers are still putting inferior hardware and displays into their Android hardware.

The fact that some android phones ship with clearly inferior hardware can be considered both a disadvantage and an advantage. Using lesser hardware with lower prices puts Android phones in the reach of people who can afford or don't care to put out the extra money for better. Despite my personal leanings towards quality, I must admit there is some merit in buying cheap when your phone is completely obsoleted in 18 months or less. The disadvantage is people who don't do their homework may end up with a phone that doesn't meet their expectations. That said, if they do do their homework and put out the money, they can end up with an android handset that is similarly high end to an iPhone. Again, which is better is subjective, depending on what aspects of the phone you value more.

quote: That’s an interesting snapshot of the consumption of mobile devices, but is there a pattern here?

This is not at all a snapshot of the consumption of mobile devices but of the usage of these mobile devices.

Example: I own two Android tablets and my wife an Android phone but I wouldn't do any serious shopping with one. I would use my desktop with a 23" screen, a real keyboard and a browser with maybe a dozen or more tabs. The tablet is saved for travel or for sofa time.

These reposts you selected are wordy and weak in support of convincing me my purchase of an Android device was a mistake.If there is something else you wished to convey, to paraphrase an entertaining Youtube animation, "I don't care."

quote: These reposts you selected are wordy and weak in support of convincing me my purchase of an Android device was a mistake.

I think you may have misunderstood the point I was making. I was not trying to convince anyone that they had made a mistake buying an Android device, that would be silly as buying preferences are personal and what phone, computer, car or game console you buy are all individual choices and people can make wildly different purchasing decisions all of which are perfectly legitimate and sensible for them.

The point I was making was about how one understands the strengths and weaknesses of the different device platforms, how those strengths and weaknesses relate to market share of units shipped and how those platform strengths and weaknesses relate to the commercial profile of each platform as a platform for business activity. The latter is important because the longevity and sustainability of a platform seems to be closely tied to the overall commercial strength of it's ecosystem and if a platform does not offer commercial opportunities of at least a minimum level then no matter how technically good it is it will probably not prosper and will probably wither (WP8 phone is a good example).

quote: This is not at all a snapshot of the consumption of mobile devices but of the usage of these mobile devices.

That is a semantic point about the choice of words in the Asymco article. No one is disputing that Android devices, in all their wild and wonderful diversity, are outselling iOS devices but the point is that it is very significant if each of those Android devices is only being used to click on a fraction of the ads compared to an iOS device, or is used to shop online for a fraction of the time compared to an iOS device, or is only being used to to buy a fraction of the apps, peripherals or digital content compared to an iOS device. It is significant because if you are a developer, digital content provider, advertiser or peripheral maker then you are only interested customers who actually spend money. Android users make lousy customers, they only engage in a tiny proportion of the activity of an average iOS customer. The number of units sold becomes a poor indicator of how to arrange one's business priorities if it takes a developer ten Android users to sell the same as to one iOS user.

And that is not a snap shot, it has been the pattern ever since both iOS and Android emerged.

Even for OEMs selling more units appears to be a significantly worse business than Apple's iOS device business.

Asymco has just posted an additional and interesting piece of research which shows how Samsung has had to spend a truly vast amount of money, £12 billion dollars spent in the last year, advertising and marketing it's devices in order to compete with Apple. The comparative figures in the article convincingly demolishes the notion that the success of Apple is simply because of marketing, it turns out Apple spends less than most of the other big players and is at the bottom of the table when it comes to marketing spend.

quote: It is significant because if you are a developer, digital content provider, advertiser or peripheral maker then you are only interested customers who actually spend money.

As I stated in my previous post, I am mostly attached to my desktop computer for a number of electronic based activities. We have tablets more for entertainment and content consumption. Just because I do my purchasing on a stationary device should not conclude that I make no purchases online. If businesses now decide to diminish the importance of desktop shoppers they do so at their own peril.Sure, I understand the move to mobility but there is a crowd of baby boomers who are just beginning to find comfort in spending online, removing the need to drive, find parking, walk through huge mall parking facilities searching for that store they seek.But, I do get your point about developers who develop exclusively for mobile devices. That, however, did not appear in my original post and is of little concern to me. To others who must weigh the comparative strengths of mobile devices it is highly pertinent.

Just why more iPad/iPhone users spend more online may indicate that many purchased these devices in lieu of a desktop or laptop device, now seeing those as unnecessary to their needs. I think the ratio of iPad and iPhone to Apple's laptop and desktop sales support my theory. This however will not be proved without knowing how many iPad/iPhone users made their change from PCs to mobile Apple devices bypassing Apple's less mobile offerings.

You do realize that these are benefits for Apple and devs, not the consumer. If anything, the fact that Apple is able to monetize your purchase so well says that they are better at milking their customers. Good reason to invest in Apple. Bad reason to purchase Apple.

quote: culture; demographics; ... popularity with teens;

Seriously? You're going after the culture of the teenage demographic as an advantage. Popularity in the teenage crowd moves as chaotically as dust in the wind.

If the higher third party developer profits resulted in a preponderance of superior apps that appealed to the majority of users and was available only on iOS, you might have a point. As it is, most of the common apps are multi-platform. There are some exclusives, but that goes both ways.

So the majority of your points boil down to "Apple is better because my teenage cousin/daughter/nephew thinks its cool and I like giving more money to Apple and App developers". Some of you points (Engagement) don't even make sense (Are you talking about the guy who tried to marry his iPhone?). Some are flat out wrong in my experience (re-sale value). Have you tried selling your iPhone to get the latest iPhone. People I've dealt with won't pay jack because it is no longer the latest one and that makes it suddenly worthless to them. In fact, you could throw fastest new release adoption in your list of good for Apple things.

Point of interest: there is an argument that could be made for the advantages of iOS with consumers, but you are so Apple centric that you've buried them under a pile of what's good for Apple. I can't help but think that you have some vested interest in Apple's well being as I simply can not otherwise resolve why Apple's benefit at the detriment of their consumers should be considered advantageous to their consumers. Nonetheless, these are the "advantages" you've presented.